Who needs Mortgage Insurance?
If you’re buying a house with less than 20% down payment, the answer is YOU.
Mortgage Insurance is often abbreviated in the industry as “MI”.
Some conforming home loans with less than 20% down do offer “No MI” or Lender-Paid MI. That option can be advantageous if you only plan to be in the home before the MI would have a chance to be removed.
Mortgage Insurance is utilized with low down payment mortgage options, and the rate varies by the type of loan program. The most common in 2021 are:
- FHA Loan
- 3.5% down payment (there is currently a 0% down FHA option)
- 1.75% Upfront MI (Finance-able)
- .85% Monthly
- Conventional Loan
- 1% minimum down payment
- Private mortgage insurance
- Can be Upfront (Finance-able)
- or Split
While not technically MI, VA Home Loans and USDA Loans do have similar fee structures under another name:
- VA Home Loan
- 0% down
- Upfront Funding Fee Varies (Finance-able)
- No Monthly Fee
- USDA Rural Development Loan
- 0% down in rural development areas
- 1% Upfront guarantee fee (Finance-able)
- .35% monthly (Annual guarantee fee)
MI appears under many names in the financing industry:
- PMI for Private MI (Conventional loan)
- LPMI for Lender-Paid MI (Conventional loan option)
- MIP for MI Premium (a.k.a. FHA MIP)
- UFMIP for Upfront MI Premium (another FHA MIP – a FHA loan has both upfront and monthly mortgage insurance)